Finance Dragon News Summary:
There are now new cash withdrawal limits and higher interchange fees for ATM transactions.
First, the news on the ATMs transaction limits.
As per the revised rules, customers can now have five free transactions each month on their home bank ATMs. Additionally, they can have three (for metros) and five (for other cities) free transactions on ATMs of other banks.
This means that if you make more than five transactions from the home branch ATM and three or five from other banks ATMs, then you will become liable to pay additional fees for the cash you withdraw.
Explaining with an example: Suppose you have an account with State Bank of India. Then you may make five ATM withdrawals from any SBI ATM but you will be charged for the sixth one. Similarly, if you make more than three ATM withdrawals if your branch is in a metro (five if you have a non-metro branch) from ATMS of other banks.
This rule was originally seen in the news on June 12, 2021 following the recommendations of a committee set up by the RBI in June 2019 to look at ATM charges and fees including interchange fee structure for ATM transactions.
Second, the increase in interchange fees.
The interchange fee per transaction has been increased from Rs 15 to Rs 17 for financial transactions and from Rs 5 to Rs 6 for non-financial transactions.
Interchange fees are a type of transaction fees that merchants pay from their bank accounts whenever a customer uses a credit or a debit card to buy something from their store. This transaction fee is paid to the bank that issued the card to cover expenses such as handling costs, fraud or bad debt costs and the risk associated with approving the payment. The June 12 news had also reported increases in charges on ATM withdrawals beyond the free transaction limit. You will have to pay Rs 21 from the current Rs 20 for each ATM cash withdrawal beyond the free transaction limit. However, this new rule will only apply from January 1, 2022.
We had reported the announcement earlier on June 12, 2021. You can read it here.